A business that earns in seven months and pays in twelve
A landscaping company in the northern half of the country does most of its revenue between April and October. Trucks are insured all year. Crews need to be hired in March, before the first invoice of the season goes out. The commercial contracts pay net 30 or net 45, so the April work is paid in June. A company grossing $900,000 can be flat broke on the first of April and flush on the first of August. Lenders who do not understand that will decline a healthy company; lenders who do will finance it readily.
Three needs come up again and again: equipment, usually in late winter; the spring ramp, which is payroll and materials before the money arrives; and the occasional large job, a commercial installation or a municipal contract, that needs mobilization money the company does not have yet.
Equipment: the mower is the collateral
A commercial zero turn mower costs $12,000 to $18,000. A crew truck with a dump body, $55,000 to $85,000. A skid steer, $45,000 to $70,000. A mini excavator, $35,000 to $60,000. Equipment lenders in our network finance all of it, new or used, over two to five years, at annual rates from about 8 percent for a company with several seasons behind it to the high teens for a first year operation. Dealer financing from the manufacturer is sometimes cheaper for new mowers and is worth comparing; we tell you when it is.
Seasonal payment structures exist and are worth asking for: smaller payments in December through March, larger ones in the season. Not every lender offers them, which is one reason to shop the file rather than take the first quote.
The spring ramp
The spring problem is solved by a line of credit opened in the autumn, when the bank statements look their best. A company with $40,000 a month in deposits over the summer can usually secure a $30,000 to $75,000 line to carry March and April payroll, repaid in June when the receivables land. Opened in March, the same line is harder to get, because the statements show the winter.
A revenue-based advance can do the same job in a day, at a higher price. For a company that missed the autumn window and has a contract in hand, it is a reasonable bridge, provided the repayment is set to the season and not spread across the winter. We place advances with funders who understand seasonal businesses and will structure them that way.
The large job
A $200,000 commercial installation needs plants, hardscape materials, rented equipment and a bigger crew before the first progress payment. Contract financing, where a lender advances against a signed contract with a creditworthy customer, exists for exactly this. So does invoice factoring once the first progress invoice is issued. For municipal and HOA work with slow payment terms, factoring is often the difference between taking the contract and passing on it.
What funders look at in a landscaping file
Three months of bank statements, read against the season: a lender who sees low deposits in February and asks for the previous summer is doing the job properly. The equipment list. Contracts in hand for the coming season, which are the strongest thing a landscaping company can show in winter. Insurance in force, and for larger amounts, the last tax return.
What helps: recurring commercial maintenance contracts, a separate business account, and a winter revenue line such as snow removal or holiday lighting. What hurts: a company that lives on cash with no deposit trail, equipment bought on personal cards, and advances stacked through the winter.
A plain recommendation
Equipment on equipment loans with seasonal payments where they are offered. A line of credit opened in September or October, every year, whether or not it is needed, so that March is never a crisis. Factoring or contract financing for the big commercial jobs. An advance only as a bridge with a repayment that ends with the season.
Every offer we present shows the amount, the total repayment, the payment schedule and every fee on one page. If the numbers do not work across the winter, you will hear it from us before you sign.